Milatović: Penalties for non-compliance with the "Europe Now" program, price growth is 4,4, and wages are 25 percent

The "Europe Now" program is standardized to be a "win-win" for both workers and employers, announced today the Minister of Economic Development and President of the Coordinating Body for Monitoring the "Europe Now" Program, Jakov Milatović.

He said this at the press conference of the Coordinating Body for monitoring the "Europe Now" program.

"What the "Europe Now" program brings is an increase in net earnings for workers and a reduction in the tax burden for the majority of employers," Milatović pointed out.

He said that the Revenue and Customs Administration has all the data on the earnings of all employees in Montenegro and that these data are comparable to the data that will be paid in January and that this comparative analysis will be used for the additional verification that will follow in order to ensure absolutely correct implementation of the "Europe Now" program.

"Anyone who does not implement the program in the manner provided by the law will be absolutely punished. There will be no selectivity," he said.

Milatović said that there will be a call center at the number 080 555 555 which will be open for reports of misuse of this program.

He said that a norm has been foreseen that clearly states that any reduction in taxes and contributions concerning workers must be reflected through an increase in their net earnings.

"It is a legal norm whose non-implementation will be checked. Its non-implementation will be draconianly punished," said Milatović.

He also said that round tables will be held in order to once again clarify questions or doubts that employers have about the "Europe Now" program.

Milatović said that there is no rational explanation why employers would not act as the law requires.

"The "Europe Now" program also reduces their labor costs," he said.

Vujošević: I hope that employers will understand that they should act in accordance with the law and that there will not be a large number of those who will try to abuse it

Ana Vujošević, Acting Assistant Director of the Directorate for Inspection Affairs (UIP), said that she hopes that employers will understand that they should act in accordance with the law and that there will not be a large number of those who will try to abuse it.

She added that the UIP is actively working on capacity building and currently has 32 active labor inspectors. According to her, a software solution has been extracted from the system, which will separate all applications related to the "Europe Now" project.

"We currently have 30 applications, that is, mostly questions about what if, hypothetically speaking, the employer offers the employee to agree to refund a certain amount of money, on hand", Vujošević stated and added that in that case a meeting will be organized with representatives of the Police Administration. She explained that such reports, after the inspector determines that there are elements of a criminal offense, will be forwarded to the Police Directorate, which will take over the case in communication with the competent prosecutor's office. "Based on the employee's report, the labor inspector can, after going to the field and establishing the factual situation, create a picture of what kind of case it is, so the competent authorities will take further actions," said Vujošević. She said that they hope that employers will understand that they should act in accordance with the law and that there will not be many who will try to abuse it. Vujošević reminded that in cases under the jurisdiction of the Labor Inspectorate, fines of between two and 20 thousand euros are foreseen for companies, between 200 and 2.000 euros for the responsible person in the company, and between 500 and 6.000 euros for entrepreneurs.

Petričević: Maneuver for abuse of any legally normative solution reduced to a minimum

Milena Petričević, director of the Revenue and Customs Administration (UPC), said that the maneuver for the abuse of any legally normative solution has been reduced to a minimum.

"Anyone who has familiarized himself with the content of the Europe Now program, if he wants the best for himself, definitely has no reason not to act in accordance with what was offered to him in the program of the 42nd Government," Petričević said.

She stated that the number of 30 inspectors, who will control labor contracts, sounds like a small number, but that behind them stands the UPC of 1,2 thousand employees with an operation divided on all grounds.

She announced that she can confirm that the "Europe Now" program is already successful, which is reflected in the enormous number of IOPPD applications, which were submitted in the last quarter of last year.

"This is the result of the planned "Europe now" program. This legal solution foresees that the IOPPD form is properly submitted, but it is important to bring the administration and review of the complete events, especially in the employment sector, into a realistic administrative state. There was the biggest gray area of the economy, that's where the biggest frauds and abuses took place, and already now, through the IOPPD form reports, it can be seen that the project has had positive effects," Petričević explained.

She stated that the collection of taxes in the last year, especially in the last two months, shows that businessmen and citizens have understood how important it is to support the project by example.

"Believe me, very soon, if this project is presented consistently and truthfully, we will feel the benefits," Petričević said.

Milatović: Montenegro is currently one of the few countries in Europe and the world that had a budget deficit of less than two percent last year

Milatović said that this Government has shown the best attitude towards employers compared to the previous period.

"This Government has heard the needs of the economy and started building a credit guarantee fund. This Government has heard the demands of the economy for that part of the non-taxable part of earnings. With the "Europe Now" program, taxes on gross earnings up to EUR 700 are zero percent. Montenegro is currently one of the one of the few countries in Europe and the world that has a budget deficit of less than two percent last year. In the midst of a pandemic, this is an incredible success. This government has reduced the public debt from 100 and a half percent of GDP to 80 and a half percent of GDP. The stabilization of public finances means that this government has stabilized public finances so much that there will be no increase in some taxes in the coming period. This government has returned in a short period of time to a level of recovery that no one expected," said Milatović.

Krvavac: Everyone can expect an increase in earnings

The State Secretary in the Ministry of Finance and Social Welfare, Branko Krvavac, said that he wanted to send a message to all employees, because, as he said, they received reports that the "Europe Now" program does not apply to the private sector, but only to the public sector.

"The Income Tax Act and the Mandatory Social Security Act apply to everyone. Everyone can expect an increase in wages," Krvavac said.

He said that he does not see the reason for the stories "why health workers more".

"That question doesn't require an answer. We know what kind of year it was, the pandemic, we know who bore the brunt of the pandemic crisis, and we believe that the medical staff deserved the biggest salary increase, an additional percentage, i.e. an increase in the coefficient. The non-medical staff also received a large increase of over 20 percent. That growth has not been recorded so far in the health sector in one year," said Krvavac.

Milatović: Price growth is 4,4 percent, and wages are 25 percent, the wrong thesis is being promoted

Milatović said that the thesis is being promoted that the increase in wages will be partially neutralized by the increase in prices.

"According to Monstat data, the price increase in Montenegro for the period December 2021 compared to December 2020 is 4,4 percent. That means prices have increased by 4,4 percent. And if 4,4 percent is a price increase of more than 25 percent increase in wages, then I accept. Imagine how the wrong thesis is being marketed. Here you have an increase in wages, an increase in net earnings, an increase in purchasing power of an average of about 25 percent. This means that a man who until now received an average salary of 530 euros will have a annual level of 1.500 euros. 1.500 euros more purchasing power. That two people who receive an average salary, one family will have an annual increase of 3.000 euros already this year. I think these are extraordinary historical things.

He added that price growth is a global phenomenon that neither the Government nor the Montenegrin economy they inherited can influence.

"But we can influence with the program "Europe now". And we influenced it four or five times more strongly compared to the existing price increase. The average salary will be increased by 24 percent, and the price increase is four percent," said Milatović.

He also said that the education sector will have a wage growth of between 24 and 26 percent, which, he said, is the highest growth in one year in that sector.

At yesterday's session, the Government of Montenegro made a decision on the formation of the Coordination Body for monitoring the "Europe Now" program.

Milatović said that we currently have a bad situation, that is, a gray economy on the labor market.

"With the "Europe Now" program, that situation is drastically improving. Whether it will be perfect, it absolutely won't, but whether it will be much better, it absolutely will," the minister said.

He said that the majority of businessmen are already behaving socially responsibly and will continue to behave socially responsibly within the framework of the "Europe Now" program.

"The increase in net earnings will return to that same economy. Someone has to spend that money somewhere. The biggest part of that money will be spent at those same employers," said Milatović.

At the last session last year, the Assembly adopted a set of laws, the implementation of which will have a significant impact on the operations of the Montenegrin economy, in the context of the implementation of the "Europe Now" economic program.

According to the "Europe Now" program, the minimum wage for employees in Montenegro has increased since January to 450 euros from the previous 250 euros.

The program introduced numerous measures related to the relief of the tax burden on work, the abolition of health care contributions, as well as the introduction of a non-taxable portion of earnings up to 700 euros. Also, progressive taxation is introduced when it comes to personal income tax and corporate profit tax.